Will Beijing Oust Mickey?

This spat wasn't in the script. Last April, Walt Disney Co. President Michael Ovitz went to Beijing in an effort to sell more Disney products to the massive China market. He met with President Jiang Zemin and emphasized repeatedly how important China was to Disney, which harbors ambitions of building a theme park inside China. The meeting was even covered by the official state broadcaster, CTV. According to one company source, Disney even turned down a proposal to broadcast ABC's World News Tonight in the Hong Kong area for fear viewers inside China would pick it up, rankling Chinese authorities.

Very diplomatic. But it hasn't worked. China has recently voiced its annoyance with Disney for backing a new movie about the Dalai Lama and the struggle for Tibetan independence, both hot-button topics for Beijing. To drive home its point, Beijing canceled a series of meetings between Chinese officials and Disney execs. Some Chinese officials even vowed to "terminate" the company's expansion plans in China if Disney distributes the film, which is titled Kundun and is filming in Morocco, with Martin Scorsese directing.